Franchise Accounting IFRS 15

Revenue Recognition from Franchise

5. On April 6, 2020, Winona Inc. entered in to a franchise contract with Mr. Jong at a franchise fee of 500,000. A down payment of 360,000 was required at the date of signing while the balance will be a 3 year note with 8% discount An option to buy the machine given was stated in the contract. The cost of the supplies for the year will be P 60,090 but this will be sold to the franchisee at 25% above cost: Prepare all the journal entries assuming the initial fee was deferred and the bargain purchase was made